“Heitkamp’s talk of deficits is pure speculation and none of it takes into account the economic growth the Trump pro-growth agenda is delivering.”
— statement on the website Get the Facts ND, June 4, 2018
One pernicious response to the growth of political fact-checking is the trend by politicians to create their own faux fact-checking websites. So we looked with interest at a website created by the campaign of Rep. Kevin Cramer, a Republican who is challenging incumbent senator Heidi Heitkamp (D-N.D.).
The website opens with a photograph of millennials looking at digital devices (and even a newspaper!) and directs people to “find the truth,” which leads to a series of “articles,” which mostly read like news releases that attack Heitkamp or bolster Cramer.
We won’t do an exhaustive account of these articles, but we will focus on the most recent one on tax cuts. Given how it is pitched, it needs to hold up to a high standard of “the truth.”
The first part of the article touts the benefits that North Dakotans will receive from the tax bill signed into law by President Trump. Cramer voted for the tax package; Heitkamp did not.
The article notes that the nonpartisan Tax Policy Center found that people in North Dakota will see the largest tax reduction in 50 states in the coming tax year. It also cites a document from the state tax commissioner that offers illustrative examples of how individuals and families in different income categories will receive reductions in taxes.
Heitkamp, at the time of the tax vote, attacked the bill for hurting North Dakotans. She made her case largely based on the long-term impact of the tax bill, saying middle-income taxpayers will lose out “in the long run.”
We’ve adjudicated this debate between Democrats and Republicans before. Republicans focus on the near-term benefit, while Democrats highlight that the individual tax cuts expire after 2025 because of an accounting gimmick that keeps the impact on deficits artificially low. Because the tax cuts expire, taxes for many individuals will go up by 2027.
Republicans insist the tax cuts will be extended, but there is no guarantee of that. In any case, the expiring tax provisions have allowed both sides to spin the tax cut with completely different numbers — never explaining the full context. We have given both sides Two Pinocchios for telling only half of the story.
The other long-term issue that Heitkamp cites is the effect on the budget deficit. When the bill was approved, the nonpartisan Congressional Budget Office estimated the tax cut added at least $1.5 trillion to the deficit over the next 10 years.
This is where the website’s “truth-telling” starts to go off the rails. First, the article attacks Heitkamp for suggesting the tax bill may affect Social Security. “Claims of cuts to Social Security are ludicrous. There is nothing in the bill that cuts Social Security,” the article says. That’s technically correct, but it’s also misdirection.
Cramer himself has suggested that the rising national debt in the wake of the tax bill will require lawmakers to tackle entitlements such as Social Security and Medicare. On Dec. 19, Cramer was asked on a local television program about how he would pay for the tax bill if it added more than $1 trillion in debt and whether he agreed with House Speaker Paul D. Ryan (R-Wis.), who said that “we’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit.”
Ryan indicated that his focus would be mostly on Medicare because Senate rules would require at least 60 votes to make changes to Social Security. But in his response, Cramer referred to Social Security.
“Well, we have to get after entitlement reform, Chris, because that’s the only way to get to the debt and deficit,” Cramer said. “Over two-thirds of our budget is entitlements. If we don’t deal with that, not only do we not deal with the debt if we don’t deal with it, but the entitlement programs like Social Security and Medicare are going to go broke.”
So although there is nothing in the tax bill specifically about Social Security, Cramer has acknowledged that the additional debt generated by the measure will require a closer look at reducing spending on programs such as Social Security. For instance, Cramer has indicated he supported raising the retirement age as part of “slight changes” that would affect only people far from retirement. (Alternatively, one could also raise more revenue for those programs, an approach Democrats favor.)
Indeed, a day later, Cramer, in another interview, seemed to backtrack from the idea of cuts to entitlements. “We need to reform all of our programs, not just to make sure people keep them but to make sure they can be kept for the long haul because both Medicare and Social Security, as you talked about, are on a path to insolvency,” he said. “So we need to shore up both of them, not to cut them, we need to shore them up for the long haul.”
Social Security certainly faces challenges, with its trust funds beginning to eat into reserves this year, according to the 2018 trustees report. Until 2009, Social Security took in more revenue than it paid in benefits, and since then, it has relied on interest earnings. Now it will begin eating away at its principal, the trustees report said. So it’s safe to say that the deficits generated by the tax bill will make dealing with the problem even more difficult — and force a reckoning sooner rather than later.
Then there is this jaw-dropping statement: “Heitkamp’s talk of deficits is pure speculation and none of it takes into account the economic growth the Trump pro-growth agenda is delivering.”
Where does Heitkamp get her “talk of deficits”? From the CBO, the official scorekeeper of Washington. The CBO is so well respected that Cramer’s “fact” website cites a CBO projection in another article to attack the Affordable Care Act.
In April, the CBO assessed the fiscal health of the United States and found that although the tax bill would bolster the gross domestic product, it also was responsible for a huge spike in projected budget deficits.
For 2018, the CBO said, the budget deficit had ballooned by $242 billion, to $804 billion, largely because of a $200 billion decline in revenue caused by the 2017 tax bill. Over 10 years, the cumulative deficit is projected to be $1.6 trillion higher, for a total of $11.7 trillion. If expiring provisions such as the tax cuts were extended the full 10 years, the cumulative deficit would be $15 trillion. By 2028, the CBO said, debt would be 105 percent of GDP, a level exceeded only once in the nation’s history, if the tax cuts were extended as Republicans desire.
Note that the CBO said these deficits would take place even though the tax cut would bolster economic growth. In fact, the CBO said that “expectations of faster growth in the economy and in wages and corporate profits led to an increase of $1.1 trillion in projected tax receipts [over 10 years] from all sources.” But even with that additional growth, the deficit is projected to increase significantly over the next 10 years — because of the tax cuts and because of additional spending approved by Congress.
Cramer’s website is simply wrong when he claims the deficits projected do not take into account the economic growth in Trump’s agenda. The CBO does take into account the economic feedback from tax cuts. As any mainstream economist will explain, the problem is that tax cuts do not pay for themselves.
It’s not just Cramer’s campaign website. Cramer himself has made this claim in interviews. And a Cramer campaign email said: “All the talk of revenues and deficits is speculation and none of it takes into account the potential for economic growth that the Trump pro-growth agenda can and will deliver.”
Tim Rasmussen, Cramer’s communications director, argues that the CBO’s work is incomplete. “The CBO did not completely anticipate the low unemployment, economic growth and record tax collections we’ve seen since passage of the tax bill,” he said. “A quick look at the stunning May jobs report is a great example of new data not available at the time of the CBO analysis.”
The Pinocchio Test
For a website that proclaims it is providing the truth and nothing but the facts, this line about the tax cuts and economic growth is poppycock. The CBO does take into account the economic effect of tax bills, so Cramer is simply wrong on that score. It’s even worse for a politician to suggest he is a deficit hawk — and ready to take on entitlements — and yet dismiss credible forecasts on future deficits by a respected agency.
In August, the CBO will issue an updated forecast that will take into account the economic information noted by Cramer’s spokesman. If the CBO announces that the new data wipe out the deficit and the tax cut pays for itself, we will revisit this fact check. In the meantime, Cramer earns Four Pinocchios.
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(Note: This article briefly posted with Cramer’s first name incorrect. It is Kevin, not Ken.)